The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, reassured the nation that competition among major players in the oil sector would eventually drive down prices of Premium Motor Spirit (petrol) across Nigeria.
Kyari’s statement came in response to recent adjustments in the pump price of petrol by the NNPC to reflect market realities.
During an interview on Arise TV’s Morning Show on Thursday, Kyari highlighted the removal of subsidy as a significant step toward encouraging new entrants into the market, thereby promoting competition and phasing out monopoly.
He explained that the elimination of the subsidy regime would provide a more favorable environment for oil marketing companies to import or purchase petroleum products and sell them at retail prices.
Kyari said, “The beauty of this (subsidy removal) is that there will be new entrants (into the market) because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.
“And that subsidy regime doesn’t have a guarantee of repayment back to the those who provide the product at subsidise price and now that the market is being regulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell it at its retail price.
“Therefore, you will see competition, even with NNPC. And by the way, by law, NNPC cannot do more than 30 per cent of the market going forward. As soon as the market stabilises, oil marketing companies are able to come in…
“Competition will definitely come in and the market will regulate the prices itself. Therefore, this is just an instantaneous price and within a week or two, you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that. Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.
“As soon as competition comes in, people will become more efficient in their depots, in managing their trucks and in managing their fuel stations so that people can come to their stations. And it is showing already, right now, you will see motorists going to stations where they can have price differences, so this will regulate the market and on its own, the price will come down naturally and I don’t see any doubt about this.”
Responding to concerns about fuel stations raising pump prices despite having subsidized stock available, Kyari attributed it to the realities of the market.
He explained that this fluctuation is a common phenomenon affecting various commodities, not limited to petroleum.
Kyari said: “This is the reality of the market. It applies to every commodity and not just petroleum.
“It could have been the other way round, prices could have collapsed downwards and those holding the old stock will have to sell at lower prices to arrive at market condition.
“It is not something serious or strange, this is a stock management issue and it is very typical, no one can do anything different about this.
“The prices we are seeing today at our station are the current price of the commodity. This means that prices in the market can go down at any time and of course, the market will adjust itself.”
